News, On Campus

CEO Of New Balance Discusses Marketing

“Believe it or not, it seems like just yesterday that I was sitting at a college business lecture like all of you,” said Rob DeMartini, president and CEO of New Balance, at an AHANA Management Academy-sponsored lecture.

A California native, DeMartini has worked at New Balance since 2007 after 18 years working at Procter and Gamble.
“New Balance is one of America’s great success stories,” DeMartini said.

William Riley started the Brighton-based company in 1906 after he noticed that his chicken had perfect balance due to their three-clawed feet. The company continued mainly as an arch support company until 1960, when it introduced its first running shoe, called “The Trackster.” In 1972, Jim Davis bought New Balance, which consisted of six people, and he transformed it, expanding the product line as sales began to grow rapidly.

“It is a very thoughtful and values-driven company,” DeMartini said of the 100 percent privately owned New Balance, which also boasts local factories. “We are the only company in America that manufactures athletic shoes in this country.”
“New England was the shoe capital of the U.S. all through the 19th and 20th centuries,” he said. “In the ’80s, when people figured out that offshoring was much more profitable, domestic manufacturing stopped.”

New Balance employs 1,300 U.S. factory workers, which incurs greater costs than it would if it outsourced its jobs. That has not, however, deterred the company from keeping its U.S. factories in business.

“Jim believed in making shoes in the U.S.,” DeMartini noted about the chairman. “When people started selling factories, he started buying. We are now exporting shoes to other countries and selling them at a premium.”

The company took on a marketing position based on the love of the sport, straying away from the business of sponsoring athletes.

“Companies like Nike were pushing very hard to sponsor athletes,” DeMartini said. “We didn’t like how some athletes behaved and took on a different marketing position. Over time we lost our performance edge completely.

“As a private company, I felt ownership was looking at the brand like a parent looking at its children … not seeing the faults,” he said. “We wanted to reface the brand and got back into the business of sponsoring athletes at a top level.”

Today, the company sponsors athletes like Olympic gold medalist Jennifer Simpson, tennis player Milos Raonic, and tennis player Nicole Gibbs. DeMartini also noted that about one-third of major league baseball players wear New Balance products. Not merely focused on fame and rankings, the company is concerned with the character of the athletes it sponsors and is careful about who represents its brand.

“We reinvented the way we looked and created a new retail format,” DeMartini said. “It has completely changed the way people experience our brand.”

DeMartini also talked about social media’s growing value in the world of marketing. His own company has had people voluntarily advertise its products on sites such as Instagram and Facebook.

“It’s not about what we say about our brand,” he said. “It’s about what you say about our brand. We’ve got the business growing again-we’ve added a billion dollars in sales in the last three years.”

In five years, New Balance’s sales growth rate has been faster than those of both Nike and Adidas.

“We believe strongly that it all starts with a great product,” he said. “It’s amazing what you get out of people when you lead them to a higher purpose. We are making products that people use for pursuing their passions.”

For a CEO, DeMartini believes it is important to be able to boil an idea down to a clear and simple point. The ability to create a vision and to articulate that vision-along with passion and commitment-constitute the responsibility of a good CEO, DeMartini said.

“There are many ways to make a living out there,” he said. “Do something you like.”

February 13, 2014
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